Steel factories to cut up to 500 jobs

By Edd Gent

Published Tuesday, October 29, 2013

Up to 500 jobs are set to be axed at three steel factories because of weak demand in the construction industry.

Tata Steel said the cuts will affect mainly management and administrative roles at sites in Scunthorpe, Teesside and Workington. About 340 jobs could be affected in Scunthorpe, 90 in Workington and 40 in Teesside.

The Indian multi-national said the planned cuts were being made amid a prolonged downturn in demand for some of the key products made by the Scunthorpe-based Long Products business, including the UK market for construction steel, which is about half of 2007 levels.

Karl Koehler, chief executive of Tata Steel's European operations, said: "European steel demand this year is expected to be only two-thirds of pre-crisis levels after falls in the past two years.

"On top of the challenging economic conditions, rules covering energy and the environment in Europe and the UK threaten to impose huge additional costs on the steel industry.

"As difficult as the proposed changes are, they are intended to build a stronger future by enabling the Long Products business to compete in even the current challenging economic and regulatory conditions.

"We will of course engage fully with employees, trade unions and our political stakeholders during this restructuring process. We will do everything we can to support our employees through this unsettling time."

Long products are considered to be semi-finished products and include bars, rods and wires, structural shapes and rails, and tubes – products primarily used in construction.

Jon Bolton, director of the Long Products operations, said: "UK demand for construction steel has fallen further since we launched an improvement programme at our Long Products business in 2011. This further market decline means we must now build on the work we have been doing to restore Long Products' ability to compete throughout the economic cycle.

"The proposed changes at our Workington engineering operations, meanwhile, are as a result of a shortfall in external projects.

"Today's proposals would help us build a more sustainable business. I know this will be a difficult and unsettling time for affected employees and their families. This action, unfortunately, cannot wait if we are to remain a vital foundation industry supporting the UK's manufacturing and construction sectors."

The company said it will make every effort to achieve the job losses through voluntary redundancies, adding that a comprehensive range of redundancy packages and outplacement support services will be made available to those who leave.

Michael Leahy, general secretary of the Community union, said: "We are obviously very concerned to hear this news and are doing all we can to support those affected by the announcement.

"We recognise the business has been dealing with a downturn in some of its markets for the past five years. Nevertheless, today's news once again reflects the fragile state of our economy and the lack of any real impetus by government to support our manufacturing base.

"Community is seeking an urgent meeting with the company to get their agreement to extending the consultation period to allow for all alternatives to be explored and also to reiterate Community's opposition to any compulsory redundancy."

David Hulse, national officer of the GMB union, said: "This terrible news has come straight out of the blue. It is a shock to the workforces in Scunthorpe, Workington and Teesside.

"GMB is bitterly disappointed as earlier this year we saw 1,000 people leave the company and everyone involved has worked hard to make all-round improvements. GMB will insist on no compulsory redundancies and to bring the number of job losses down."